Three Reasons Why Blue Collar Retirement Is Disappearing

Robert Laura
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Growing up in Detroit, most of my family worked for one of the big 3 automakers or one of its major suppliers. We were a middle class, blue collar family but felt better off than some of those around us because of my Dad’s hard work and overtime, not to mention my mom’s part time gigs that bolstered our lifestyle.

Even as I entered the financial services industry, a good number of my first clients were blue collar. Whether they were an integral part of the assembly line or were in skilled trades, they had extra money to save outside of the company plan. But times have changed. In fact, over the years, I have slowly seen blue collar workers lose their grip on retirement and slowly, but surely fall behind.

The Problem With Blue Collar Retirement (photo credit: Shutterstock)

Clamp Down On Side Jobs

One of the most admirable aspects of blue collar people is their ability to hustle and work hard. It seems to be ingrained in them from an early age. Ask any blue collar professional when they started working and you’ll inevitably hear how they were raking leaves, shoveling snow, mowing lawns, babysitting, or doing whatever they could to earn a buck before they turned 10. There was no asking mom or dad for some extra money. If you wanted something, you went out and earned it.

Well this trait doesn’t go away as people get older, therefore most blue collar workers have a side job or two going on most of the time. It’s how they bought that cottage up north, paid for the boat, or how they afford that nice vacation a couple times a year. But the gig is up thanks in part to technology.

The problem for the blue-collar electrician or HVAC guy who drives a company van with all their tools in it, is the boss knows where they, and their van is at all the time. That means no more Saturday or Sunday installs, or finishing up a job ahead of schedule and shooting over to their side gig. Navigation systems not only ensure they get to the primary job’s location, but also that the company knows when they got there and how long they stayed.

By my estimate, the reduction in a blue-collar worker’s capacity to do side work can reduce their income by as much as 20%. That’s not only a major blow to their lifestyle but also their retirement savings.

Biting Off More Than They Can Chew

Not all blue-collar folks want to work for someone else. They dream of bigger things and moving up the social-economic ladder so they launch their own businesses, sometimes to their very detriment. While there are plenty of examples of blue collar successes, blue collar business failures are rampant, primarily because of the character traits that are ingrained in many of us. When the going get tough, you double down. You work even harder and you’re not supposed to give up – ever. The issue, of course, is that when a business is failing and someone does, “whatever it takes” to keep the dream alive, that usually means home equity, credit card debt, and even retirement savings can vanish.

It’s not that blue-collar workers can’t run successful businesses, the issue is that “don’t quit attitude” can get expensive and often times, blue collar workers bite off more than they can chew. I’ve seen it countless times. For example, the hair stylist who is finally ready to launch her business leases a nice place in a high traffic area. Things appear to start out well and she is busier than ever. So busy in fact that she doesn’t realize her business isn’t actually making any money. There’s a good flow of money coming in, but unexpected and additional costs of doing business, also have a way of draining the account.

In other cases, they overestimate the market and assume revenue will cover expenses sooner than it actually will. They go out and rent a nice office, buy all the essential technology and even hire a company to help them market their business. They’re proud that they spent $8,000 or $12,000 just to get off the ground. However, the catch is, they also need that money back within the next 6 months. They have no additional reserves, and quickly realize the time to acquire a new customer takes twice as long they estimated, and now they are robbing Peter to pay Paul. In other words., they’re paying utility and other payments every other month to juggle their money, but late notices and fees are draining them both personally and financially. As a result, they end up getting a hard financial lesson that not only costs them time and money, but also any chance of retiring on time.

The Cost Of Future Generations

An unspoken creed of blue-collar families is the requirement of helping future generations get a leg up so they don’t have to work as hard as they did. It’s another admirable trait of working-class Americans, but things are so different than they used to be 20-30 years ago. Not only are they making less money because of fewer side gigs, or because their business isn’t doing as well as they hoped, but the cost to send their kids to college, pay for a wedding, or help with a down payment on a new home is just out of reach. But again, that “can do” attitude and “I’ll just work harder” mentality pushes them into financial oblivion

This is great for the kids, but definitely delays retirement much longer than most people expect. With annual college costs near $25,000 per year, the average wedding costing over $40,000, and changes to mortgage funding requiring families to put more money down, blue-collar parents aren’t just adjusting their retirement date by a year or two. They’re looking at 5-10 years or drastically reducing their lifestyle during it. A bitter pill to swallow as they debate which is more important and struggle to do what their parents did for them.

Overall, blue-collar professionals are an important component of the middle class and American economy. They are icons of the American dream, and the backbone to much of the prosperity and freedom we enjoy. However, their ways and lifestyle are being threatened like never before. With limits on their ability to do side jobs, an increasing complex and unforgiving small business environment, and the unsustainable costs to help future generations, blue collar retirement is disappearing.